Ministers meeting in Luxembourg yesterday (7 June) approved an overhaul of how the EU collects data from the bloc's public accounts, after Greece was caught tampering with the size of its deficits and amid fears that Hungary is doing the same.
Eurostat will see its role elevated from an EU statistics agency that can ask "a limited set of questions" to a body that can demand more information about countries' national accounts, including sending frequent missions to countries showing "suspicions of deviations," according to European Commission officials.
The new procedures will only apply to a category of countries which have excessive deficits according to the bloc's rules – that is national debt above 3% of GDP – insisted a spokesman from the European Commission.
Diplomats attending rounds of meetings yesterday and today said the draft regulation, which is one of a plethora of measures for stricter budgetary surveillance under discussion, would be approved with little debate.
In January, Greece unnerved both the Union and markets with the news that the country's previous centre-right government had revised down the true size of the country's national debt from 12.7% to 7.7% (EURACTIV 13/01/10).
Commission officials say they are positive about Eurostat's new role as it will enable EU staff to vet both national and local accounts.
"Previously we could just carry out a technical visit to assess the accounting methodologies and there were limited number of questions we could ask," said a spokesperson for the EU executive.
'New stage has been reached'
"Though we will not have full-audit power, more like semi-audit power, we can send frequent technical missions to assess countries when there are suspicions of deviations," the spokesperson added.
"It is a European inspection of sorts. Therefore it is an important leap forward, conceptually-speaking. A new stage has been reached. This is pretty good news for European statistical governance," added a diplomat from a large member state.
Hungary is the latest country to give investors grief as its forint currency dropped to a year low, sending borrowing costs sky-high.
Yesterday Hungarian officials tried to distance themselves from speculation that they were facing a Greek-like crisis by announcing structural changes to rein in deficits.
"It is quite extravagant that such budgetary readjustments are taking place. It brings to mind unpleasant precedents," speculated a Brussels-based diplomat.
"It is very clear that the objective of this Ecofin [meeting of EU finance ministers] is also to know exactly what the situation in this country is," the diplomat added.